Using the Lipper Leaders scoring system to analyse the best-performing funds in the IA Mixed Investment 40-85% Shares sector.
The Investment Association’s Mixed Investment sectors offer three (or four including the rather inflexible Flexible) sectors, graded by the proportion of equities in each: from 0 to 35%, 20% to 60%, or 40% to 85%.
This is the most equity-heavy mixed investment sector, and has been by far the most popular. The sector has more than £114bn in assets, whereas the other two combined are less than £73bn. Up to last year, it was the only one to receive net inflows over one, three and five years, with the other two seeing cash head out of the door over.
There are two likely explanations for this bifurcation. The first is simply one of performance: Over five years, the Mixed Investment 40-85% mean return was 38.02%; Mixed Investment 20-60% was 24.76%; and Mixed Investment 0-35%, 10.49%. In very broad terms, the higher your equity allocation, the greater your return.
Investors also suffered the debacle of bond valuations crashing as rates spiked in 2022. They therefore had plenty of reasons to increase their equity weightings in mixed investment portfolios. Indeed, the correlation between three-year returns and current equity weighting across the three sectors is 0.62, which is significant.
The second reason is a little less obvious. Following the Global Financial Crisis, when base rates were close to zero—and investment grade bond returns not that far off—investors likely used mixed investment funds with higher bond weightings as bond proxies: a fixed income-like profile with an equity kicker. When rates went back up in 2022, bond yields followed in their wake, enticing investors back into “pure” bond vehicles, so this trend reversed, to the detriment of MI funds with higher bond components.
However, over the first seven months of the year, all three mixed asset sectors are in the red. Indeed, 40-85% has shed more money (-£1.22bn) than the other two combined (-£1.14bn). What’s happening? It’s possible that mixed investment investors are getting skittish about equity valuations—particularly about US equity valuations. That’s suggested by the fact that IA North America redemptions over this period have been the second largest (-£10.79bn).
However, the US now makes up about 63% of global equity indices, while the average equity weighting in MI 40-85% is 68.4% and US equity weightings are 27%. The US weighting within the equity portion of the mean portfolio is 39.5%—much more diluted than for the most common global equity indices, or for the IA Global sector average.
That lower US weighting will likely have dampened aggregate returns over the past few years, given that the US market has been on a tear for the past decade and more, not least because US exposure was even lover, at 23%, in 2023. However, this underweight could be a benefit should equity market leadership change.
These outflows may be because managed portfolio services are putting pressure on the traditional mixed investment fund, though the growth of the former over the past few years has been considerable, without seeming to dent MI 40-85% flows.
Unsurprisingly, the top 10 performers over three years have a higher average equity exposure (75.4%). As was the case last year, the Orbis OEIC Global Balanced Fund Standard fund has the highest three-year return, and is also well ahead over 12 months. As 75% of its composite benchmark is the MSCI All-Countries World Index, it will likely have a structurally higher equity bias.
The Credo Dynamic Fund is the one fund in the table that has an equity exposure below the sector average (59%). However, the fund doesn’t have a benchmark, can go up to 50% in cash, and four years ago had more than 80% in equities. The manager seems to be making the most of their investment freedom. LSEG Lipper therefore considers it a Mixed Asset GBP Flexible fund.
Table 1: Top-Performing Mixed Investment 40-85% Shares Funds Over Three Years (with a minimum five-year history)
All data as of July 31, 2025; Calculations in GBP
Source: LSEG Lipper
This article was first published in the September edition of Moneyfacts, p16.
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The views expressed are the views of the author and not necessarily those of LSEG Lipper. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. LSEG Lipper cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.
